MRVL's Optics Portfolio: How Relevant is it for the AI Networks?

Marvell Technology MRVL is contributing heavily to the global AI networking space with its optical interconnects. As AI systems are taking more bandwidth for performance optimization, the existing copper cabling is unable to keep up with it. Henceforth, co-packaged optics are taking the lead in this arena.

Marvell Technology’s co-packaged optics are now gaining traction for this performance optimization with switching ASICs. This technology shortens electrical traces and reduces power consumption, improving performance per watt. Power-hungry DSPs or retimers are also getting replaced, adding to efficiency with this move.

Marvell Technology’s chipset integrates a 200G-per-lane Transimpedance Amplifier and laser drivers, enabling 800G and 1.6T Linear-drive Pluggable Optics modules. These modules cut power consumption and latency while offering longer reach than traditional copper cables.  MRVL’s latest networking products have optical fibres instead of copper connections, which are optimum for faster data transmission needs in AI systems.

Furthermore, Marvell Technology’s Silicon Photonics Light Engines support speeds up to 6.4T by combining several parts into compact modules, making them ideal for both plug-in and co-packaged uses. These features can help enterprises scale their large AI workloads. MRVL expects its electro-optics products to grow in double digits sequentially in the third quarter of fiscal 2026.

Traction in its optics business is a contributing factor in Marvell Technology’s top-line growth. Its second-quarter fiscal 2026 revenues grew 57.6% year over year. The Zacks Consensus Estimate for Marvell Technology’s fiscal 2026 revenues is pegged at $8.11 billion, indicating year-over-year growth of 41%.

How Competitors Fare Against MRVL

As optics are gaining traction among next-generation AI infrastructure, Cloud Data Centers and Scale-Up and Scale-Out Networking, companies like Broadcom AVGO and Coherent Corp. COHR have become Marvell Technology’s formidable competitors in this space.

Broadcom is a dominant player in the pluggable optics space with offerings, including PAM4 DSPs and optical transceivers. Broadcom directly competes with Marvell Technology across high-speed PAM4, Ethernet PHYs, and optics used in hyperscale AI networks.

Coherent also offers optical components, transceivers, coherent optics and optical engines used in data centers, overlapping with Marvell Technology's light engine offerings. Recent growth in AI and ML workloads has ramped up its sales of 800G transceivers and active optical cables.

MRVL’s Price Performance, Valuation and Estimates

Shares of Marvell Technology have lost 24.5% year to date against the Electronics - Semiconductors industry’s growth of 35.8%.

From a valuation standpoint, Marvell Technology trades at a forward price-to-sales ratio of 7.91X, higher than the industry’s average of 7.41X.

The Zacks Consensus Estimate for Marvell Technology’s fiscal 2026 and 2027 earnings implies year-over-year growth of 80% and 18%, respectively. The estimate for fiscal 2026 has been revised upward in the past 30 days, while the estimate for 2027 has remained unchanged for the past 30 days.

Marvell Technology currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here

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This article originally published on Zacks Investment Research (zacks.com).

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